Ernie Newman: Grocery Policy Expert on food prices being the fifth in the developed world

A view higher than average grocery prices show something's clearly wrong with our grocery sector. 

The Commerce Commission's revealed our prices are the fifth-highest in the developed world.  

It highlights the market doesn't support new players and major supermarkets continue to wield power over smaller stores. 

Grocery policy expert Ernie Newman told Ryan Bridge there's no good reason for us to pay so much. 

He says for a country that's an extremely efficient food producer, we should be paying way below the OECD average – which we used to. 

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Episode Transcript

Speaker 1 (00:00):
The Commerce Commission's latest grocery reports out, and not much
has changed, big two supermarket chains dominating still eighty two
percent market share. We're paying the fifth highest price in
the developed world, apparently, while food stuffs is in profit
more than international supermarkets like wal martin Tesco. Ernie Newman
is a grocery policy expert on the program this morning. Hey, Ernie,

(00:22):
good to have you on the show. Now, is this
The number that struck me was three percent? So we're
paying on average three percent more than the OECD average
for our food. Is that bad?

Speaker 2 (00:36):
Oh? It is for a country like this, which is
an extremely efficient food producer, we shall be paying way
way below the OECD average, and you know years ago
we did. The problem is that far too much.

Speaker 1 (00:52):
The thing is we we're an export nation, right, we
export most of what we produce, which is subject to
an international price.

Speaker 2 (01:01):
I wouldn't say most. Well, yeah, in certain markets we do, yes,
and the dairy and horticulture industries that's true. But there's
a huge amount of local produce where the problem here
is excessive markups. So that there are problems with the
excessive profitability of the retail sector. And I guess there
are also problems with distribution because you know, we all

(01:23):
feel good when volunteer is doing well, but that's not
being passed through the community. That's all going to the
farmers and not being passed through the consumers. And that's
why it's creating an increasing and a huge imbalance between
the rich and poor.

Speaker 1 (01:37):
But the farmers have invested their time, energy and money
into a business and this is this is their reward.
And they're not always making money, are they. I mean,
sure times are good now, but they're not always that way.

Speaker 2 (01:50):
Well, that's true, and I mean you can get into
the whole argument about the Fontira thing. You know, when
there's bad weather and drought conditions and biosecurity issues and whatever,
we all dip into our pockets and we all pay
to help the farmers out on that. And maybe it's
a bit of a time for a quid pro pong
where New Zealanders could pay but less for our butter

(02:10):
and cheese to make up for that.

Speaker 1 (02:12):
Largest you're talking about a corporate basically sponsoring the New
Zealand public.

Speaker 2 (02:19):
I know I'm talking I'm talking about it a government.

Speaker 1 (02:21):
Here, because government subsidizing products.

Speaker 2 (02:24):
Well, no, not subsidizing not subsidizing at all. But there
needs to be a payback to the whole community when
the farmers are doing well, just as there is I
guess a degree of corporate largest from the community to
the farmers.

Speaker 1 (02:41):
There is ernie. There is when the farmers do well,
they pay more tax. When they pay more tax, we
have better hospitals.

Speaker 2 (02:49):
That at the moment you're seeing that at the moment earning.

Speaker 1 (02:51):
My problem is that if we are only three percent
more expensive than the OECD average, and we haven't taken
into account the fact that we've got GST at fifteen
percent on everything, are we are things really that bad here?

Speaker 2 (03:06):
Well? I think they are, And with respect, I think
you've been listening to too many supermarket lobbyists on this.
You know, the fact is we are of food producing country.
We should be one of the most economic places in
which to buy food in the world, and we used
to be. And if you look at the Communist Commission figures,
the increase in our food prices over the last five

(03:29):
or ten years has been way way way ahead of
general inflation. Now there's something wrong when we're paying the
kind of prices that we are for basic food stuff,
for fruit and vegetables for milk and cheese and so on.
You know, we should be the best place of the
world in which to live for products of that kind.

Speaker 1 (03:47):
Yeah, we also import a bunch of stuff that we
buy at the supermarket, right, and the chipping costs have
gone up. There's a whole bunch of reasons why things
have gone up in price, especially for a country like
New Zealand at the bottom end of the world.

Speaker 2 (04:01):
No, the bottom end of the world argument doesn't really
stack up this. There are certain products that are imported.
But when you when you look along with supermarket shelves,
the things that we're buying every day. You know, our bread,
our dairy products, our produce, our vegetables, you know a
lot of dry grocery lines, ice cream. All of those
things generally are made made locally or in Australia where

(04:23):
the shipping costs are not necessarily that great, so that
those arguments don't stack up. The issue. The issue here
is the inflation over the last few years.

Speaker 1 (04:32):
It's been bloody, terrible hurts every day. Ernie, appreciate you
coming on the show this morning. Ernie Newman, who's the
grocery policy expert, on the latest Grocery Report.

Speaker 2 (04:42):
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